In-app-ropriate: don’t use an online service to track your spending

Photo courtesy of Frank Vassen


There are numerous sites and apps where you can sign up to manage your money, track your spending, and all of that. From what I’ve seen, they range from okay to horrendous, depending on what their angle is (and what they’re selling).

My problem with them is primarily that they are unnecessary. Do you really need to log in and have a fancy responsive design to be able to add numbers together?

But the service I use tracks my spending and automatically categorizes it based on the merchant. All I need to do make sure I always use a card for my purchases, and then link my bank accounts so it’s all connected.

Oh, where do I begin?

Mandating payment type = bad

Any service that mandates the use of a specific mode of payment—especially if that mode is plastic—is going to create inefficiencies and cause you to spend more.

True, there are times when using a debit card will make sense. But there are also really inappropriate times to do this too, like when you pay extra fees for not paying with cash. (This is also one reason why I wouldn’t even recommend using the “envelope system” for any more than a few spending categories.)

Link your bank accounts = really bad

So you want to link your bank accounts and other credit card accounts to the service.

In today’s world, where you can’t go to any store and pay with a card and not have your info get stolen and then sold, where every day another website gets hacked because no one knows how to make a secure web site.

In this situation, you’re going to link your bank account information to some app?

I’ve been accused of wearing a tinfoil hat before (ahem) but to me this is a simple risk/reward calculation:

Reward: The convenience of managing your accounts all in one place.
Probability: 100%.
Level of Benefit: Moderate

Risk: Dealing with account hacking and theft.
Probability: >0%.
Level of Suck: Incredible

Think about the implications here.

Someone else’s categories = unhelpful

I recently signed up for one of these online budget-tracking services, and counted about two dozen categories there. Even I’m overwhelmed now. Half that is more than enough for most people.

Also, when your spending is “automatically” categorized, whose categories are these? Yours or mine? We all have our own categories, and we get to decide what fits in what category. For example, if you’re trying to track your coffee consumption, you may want a category called Coffee. But your purchase might be categorized as Restaurant.

While we all have commonalities, everyone’s situation is unique. I like to track money spent on lunch separately from other money spent on going out to eat. That’s my choice. It’s yours too. You decide.

Tell, don’t show

The biggest reason why I dislike these automatically-categorizing services is that they are descriptive, not prescriptive. They focus on what you’ve already done, and not on what you’re planning to do.

For example, say you diligently use your card every time you do anything. You then log on to the service and see “oh hey, looks like I’ve spent X on this and Y on that.” And while you may adjust your behavior based on what you’ve learned here, you didn’t set out with plan. You are now reacting to what you’ve done.

Instead, I want you to front-load this behavior. Say what you’re planning to you at the onset, and then back it up with action. Don’t let your bank or whatever tell you what you want to already know for yourself.

Updating plugins won’t make you write better songs

I’ll close with an analogy.

Musician Glen Phillips (from Toad The Wet Sprocket) in an interview once talked about the difficulties in staying motivated when in the studio, especially as a solo artist. He mentioned that he would often get distracted and spend time updating his plugins (which in digital recording are the things like reverb and other effects). He noted with sarcasm that as if having the most updated plugins is the difference between success and failure in music.

(I am unable to find the original source right now, so I’m going from memory here. On the off-chance Glen that you’re reading, can you confirm/deny?)

For me, finding an online service to help you manage your own financial behavior is akin to “updating your plugins”. It feels productive, but it’s not really gaining you anything. It’s the difference between working hard (which I’m very good at), and working smart (which I’m getting better at).

Now, I’m painting with a broad brush here, and am willing to be challenged on any of this. And to this end, I plan on signing up for a bunch of these online services and giving them a real honest test-drive. Expect this soon.

But whatever you decide, keep your eyes on the prize: Uncover the secret life of your money. Make it work for you, not the other way around.

"And don't mess around with the plugins."

And don’t worry about the plugins.

But enough about Glen. Do you use an online budget tracking software?

Mike Pumphrey

Mike Pumphrey

I'm the founder and author of Unlikely Radical, a site to help people succeed with money, achieve their goals, and live intentionally.

I offer a free phone consultation to anyone who is interested in changing their financial narrative. Are you ready? Click here for details.
Mike Pumphrey
Posted on April 6, 2015
  • mpinard

    Ha! Agreed here, especially as I just watched John Oliver’s interview with Edward Snowden. #Onthemoney

  • Hi, I’ve been following your blog for a while; great stuff! Have to disagree with you on this one though. I’ve been using for 6 years now, and it’s been an incredible tool to monitor and plan finances of my life.

    First, regarding security, reputable services have access to the statistics of how you spent your money, but don’t have access to the actual money in those accounts. In other words, getting hacked doesn’t mean you’re at risk for identity theft or financial loss. Key is reputable, and again, I highly recommend

    Second, regarding data–yes, these services primarily aggregate “what you did” and don’t prescribe for you what to do going forward, but this is far better than what I had before; which was tracking finances on a piece of paper or spreadsheet. As for budgeting and applying the info to the future, that part is up to you; not sure how an “app” would tell me how to spend my money. does try to give recommendations, but I don’t find it useful; instead, there are great integrated tools to manage budgets and financial goals.

    I disagree with the comparison to updating plugins; using a service like this doesn’t take much work at all as long as you’re not manually entering cash transactions. And I don’t think financial awareness has no value.

    • Hi Xander. Thanks for writing in! So, please keep in mind that I haven’t used Mint, though I plan to explore it soon. It was originally touted as a service where I could connect all my accounts to keep them updated, which is a non-starter for me, as I don’t want a web service to have access to any of my accounts!

      So, putting aside the account connections, my question to you is: What can Mint do that I couldn’t do myself? How does it make things easier? How is it better than tracking things with a spreadsheet? How does it help with budgeting/tracking? I’m genuinely curious.

      And thanks for reading! I really appreciate it.

      • Oh man, I don’t know where to start, so I’ll just use screenshots to illustrate how I use it (some are mine, some I found online). While reading, imagine how one would do it with paper or spreadsheets.

        #1, #2, #3. Mint is awesome at helping me track after the fact, where I’m spending my money, and how it changes over time. The fact that this is done automatically is probably why I have this information at all. You see groupings by category, drilldowns into areas, and it’s all nicely tied to its Budget section, so you can see the impact of your budgeting’s success or failures, as well as giving you a cue to rebalance areas where you’re spending too much. It’s really good at

        #4, #5. Speaking of budgets, this is where I spend the most of my time in–Mint is really good at helping me set structured budgets and keeping me on them over time. I have the app on my phone, and as soon as I spend in one area, I can see how much “budget” i have left. It’s really good at helping you highlight trends over time, and adjusting them.

        #6, #7. Net income view, and net worth view. Yes, you can do these by hand each time you want to view them, but it would be a major pain.

        #8, #9 Alerts, and upcoming bills I don’t always want to pore over my money details to realize something’s wrong later. Mint incorporates common money questions, and creates automated alerts to help keep you on track.

        It’s really all about having the masses of data made easy to consume. I’m no expert in personal finance, and I appreciate that gives me visibility into all this. Best of all, it takes ZERO time on my part to get all these views.

        I use TurboTax to file my taxes. It’s made by Intuit, the same people who own There is very little privacy that I’m losing that I haven’t lost already. Oh, and makes filing taxes SUPER easy; it can literally import from all the places where you do have accounts, and send it straight to TurboTax.

        • Wow, thanks for the detailed analysis. Are you sure you don’t work for Mint? 😉

          But anyway, like I said, I don’t have enough experience to decide for myself about the service, though I do plan to investigate (okay okay, maybe sooner than later!). But I think the most important take away is that we all need to keep our “eyes on the prize” as it were.

          For me, the goal in this case is to encourage good behavior that allows us to thrive. If using a service like Mint helps one keep track of things that they wouldn’t do otherwise? Then it’s clearly a plus, so long as you accept the possible downsides.

          My only point is that we don’t *need* this. There’s nothing outside of yourself that you need to keep track of your finances. And when you take the initiative to do it yourself, you will reap rewards that only intentionality can bring.

          But I really do appreciate the perspective. Please keep reading and continue to keep me honest!